The Power 20

Ben S. Bernanke

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WhatChairman, Federal Reserve BoardWhyBen S. Bernanke has given advisers equal reasons to cheer and boo over the past few years, and 2013 probably will bring more of the same.

Mr. Bernanke, 59, chairman of the Federal Reserve Board, has been fighting to get the economy going again — with so-so results. To stimulate growth and spur hiring, he has kept interest rates at record lows through a bond-buying program under which the Fed purchases longer-dated Treasury bonds and sells shorter-dated notes.

On the one hand, it has helped the stock market, which has recovered to pre-Great Recession levels. On the other hand, most investors have probably missed out on the market recovery because they have been dumping stock mutual funds like hot potatoes for the better part of three years and rushing into bond funds. But bond funds are exacly where expected returns have been decimated by Mr. Bernanke’s low-interest-rate policy.

If Mr. Bernanke is able to get the economy humming next year, he could take his foot off interest rates and let them rise. That could be an adviser’s worst nightmare, as more than $2 trillion is sitting in bond funds today. According to Morningstar analyst reports, at the current interest rate levels, just a 1-percentage-point rise in interest rates would cause the Barclays Capital Aggregate Bond Index, the most commonly used bond fund benchmark, to lose 4% to 5%.—Jason Kephart